Archegos Blowout Heaps Pressure on Credit Suisse – The Wall Street Journal
Credit Suisse Group AG Chief Executive Thomas Gottstein made getting a tight grip on risk-taking one of his first moves after starting the job last year. It wasn’t enough to prevent two big blowouts: at Archegos Capital Management and Greensill Capital.
Bank shareholders are bracing for a multibillion-dollar hit from a fire sale of positions held by hedge fund Archegos and analysts downgraded its stock Tuesday over the reputational damage.
Shares in the Swiss bank fell another 2% as investors estimate the scale of the damage. Its shares are now down 10% for the year, even as crosstown rival UBS Group AG’s shares have risen 15%.
Credit Suisse hasn’t said exactly what size of a loss it is likely to take from liquidating positions at the fund, run by former Tiger Asia manager Bill Hwang. It is expected to say more this week, according to a person familiar with the matter. In a profit warning Monday, it said the losses could be “highly significant and material” to its first-quarter results.
Another banking victim emerged Tuesday when the securities business of Mitsubishi UFJ Financial Group Inc. said it could lose $300 million from its exposure to a U.S. client, which it didn’t identify by name. The bank is Japan’s largest and the trades took place at one of its overseas subsidiaries.